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[February 13, 2013]

OPINION: Going modest on Medicare reform

Feb 13, 2013 (The Wenatchee World - McClatchy-Tribune Information Services via COMTEX) --
It wasn't there. There was none of the delirious thunder you expect when President Obama makes a profound policy pronouncement during a State of the Union address. No woo-hoos and yelps. No vice president leaping to his feet. There was just a smattering of applause, some polite bipartisan pitter-pat. At least, that's what it sounded like to me.

"Yes, the biggest driver of our long-term debt is the rising cost of health care for an aging population," said the president. "And those of us who care deeply about programs like Medicare must embrace the need for modest reforms -- otherwise, our retirement programs will crowd out the investments we need for our children, and jeopardize the promise of a secure retirement for future generations. ... On Medicare, I'm prepared to enact reforms that will achieve the same amount of health care savings by the beginning of the next decade as the reforms proposed by the bipartisan Simpson-Bowles commission."
The tepid response from his own party, noted by the post-speech commentators, does not bode well for the president's proposed reforms -- a little means testing, cuts in prescription drug payments, some alteration of the fee-for-service model that all say drives up costs. The president himself described the proposals as "modest," which some experts say overstates their potential impact. Even modest reforms raise hostile instincts and, judging from the sound effects, cause many Democrats to sit on their hands.

The Washington Post pointed out, that saving what the Simpson-Bowles debt-cutting proposals would save, amounts to only $341 billion over the next 10 years. For perspective, the Office of Management and Budget projects that federal entitlements -- Medicare, Medicaid and Social Security -- will cost $10 trillion over the next five years. Their expense grows faster than revenue. Soon after Obama leaves office they will account for 60 cents of every dollar the federal government spends, and soon thereafter will absorb every cent of federal revenue and leave us to borrow for everything else. Chris Conover in Forbes reported on an analysis from Obama's own Treasury Department that concluded "current policy is unsustainable." Payroll taxes pay less than half of Medicare expenses. Patient premiums pay less than an eighth. The Medicare cost per patient is projected to triple by 2040, to $11,293, while the number of taxpaying workers per retiree drops. There is no trust fund. There is no stash of cash. Nobody saved your premiums. It all is funded by taxpayers now, and borrowing.

The preferred Democratic strategy may be to pay lip service to the president's modest proposals, sit back and hope Republicans complete their political suicide by pushing some drastic voucherized privatization scheme that retirees will hate. Sen. Marco Rubio referred to it in the only memorable moment of his GOP State of the Union response, other than his much-discussed big gulp from the water bottle. "Anyone who is in favor of leaving Medicare exactly the way it is right now, is in favor of bankrupting it."
Yes, but cue the let's-kick-the-can-down-the-road metaphor. Do nothing for as long as possible, and win elections. Find some economists who say deficits, debt and rising health care costs are good for us. Ignore those warnings from the Congressional Budget Office. They are so dry and dull. "The aging of the population, increasing health care costs, and a significant expansion of eligibility for federal subsidies for health insurance will substantially boost spending for Social Security and for major health care programs relative to the size of the economy." Federal spending will reach 23 percent of GDP by 2023 and be "on an upward trajectory." Revenues will be substantially less than that. "Such high and rising debt would have serious economic consequences," the CBO said.

No matter. Just wait and cheer for the gun control stuff.

Tracy Warner's column appears Thursdays and Fridays. He can be reached at warner@wenatcheeworld.com or 665-1163.

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